UK capacity market has failed to deliver flexibility, says think tank

Posted: March 9, 2017 by oldbrew in Energy, government
Tags: ,

The UK is struggling to get any reliable power generation built under its existing energy policies, as Utility Week explains. Meanwhile subsidies to renewables, and old coal-fired plants (as emergency back-up) roll on, making the future uncertain.

The capacity market has failed to deliver flexibility and reliable new-build generation, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) has argued.  Existing generation should be exiled from the mechanism and support reserved for flexible new-build capacity, according to the think tank.

“While the goal of the capacity market was to drive investment in reliable new generation, the scheme—with £3.4 billion in awarded contracts to date—has yet to incentivise a single large new power plant,” the report said.

“This support for existing generation is distorting energy markets and has subsidized outdated investment, including more than £450 million for existing coal-fired power plants.” This was despite government intervention to increase the volume of new generation contracted by increasing the procurement target in the most recent four-year-ahead (T-4) auction.

“The enlarged T4 auction took place in December 2016, but achieved only a tiny increase in new generation as a proportion of the total contracted capacity, from four per cent to seven per cent,” the report said. It noted that the only new build combined-cycle gas turbine to secure a contract was a 370MW replanting of an existing power station in King’s Lynn.

The government should instead “repurpose” the capacity market and hold “smaller, targeted capacity auctions solely for flexible, new-build generation, including gas peakers, demand-side response and storage”.

The report continues here.

  1. The ‘renewable’ energy ‘revolution’ doesn’t seem to have improved our ability to generate electricity does it? Or indeed any desire to build new energy generation.

  2. oldbrew says:

    There’s not much incentive to play second fiddle to subsidised alternatives that have automatic grid priority any time day or night.

    Musical interlude…

    H/T Jo Nova – Fifty Shades of Loadshedding

  3. ivan says:

    fen, as long a the government subsidises and consumers are forced to add to that subsidy to totally useless renewable energy we will never get any new reliable 24/7/52 power generators built.

    Until someone in government forces the renewable energy subsidy farmers to compete on a level playing field – they enter a contract to supply a certain amount of energy for a fixed period and if they don’t they pay twice the contracted amount to the treasury – there will always be an uncertain future for the lights to be kept on.

  4. oldbrew says:

    ivan – that’s why the think tank says the UK should hold “smaller, targeted capacity auctions solely for flexible, new-build generation, including gas peakers, demand-side response and storage”.

  5. ivan says:

    oldbrew, for that to work the subsidies that are being paid to renewable subsidy farmers must be stopped. The savings will then go a long way to enabling the targeted capacity auctions, it might even give some semblance of sense to the renewable industry after all wind and solar are old tech now and should be able to work without government and tax support.

  6. oldbrew says:

    ‘old tech now and should be able to work without government and tax support’

    Sure, but the same could be said about nuclear.
    – – –
    Green light for new pumped storage facility

    Welsh scheme could herald “many” more pumped storage schemes in the UK

    According to SPH, the UK could build some 50 GWh of pumped hydro storage using unconventional sites like ex-industrial quarries, coastal locations and existing drinking water reservoirs.

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